A Game Theoretic Model for Strategic Coopetition in Business Networks

Abstract

Multi enterprise business networks, such as supply chain and transportation networks, are prevalent in today's world. Such networks combine both cooperative and competitive aspects: enterprises simultaneously cooperate so as to obtain value beyond what each company can obtain on its own and compete to divide this value. We present a generic game theoretic characterization of such networks and demonstrate theoretical results defining the interplay between cooperation and competition in these networks. In addition, by building on results on stability in business networks (Ostrovsky, Hatfield et. al.) we show how such stable networks can be formed while maximizing the network value.